Since our college days, my best friend and I have used the expression "Making that money" when talking about success, both professionally and personally. We hope you enjoy our stories, and share some of your own.

Monday, March 2, 2009

Theory Versus Practice - an Age Old Debate

This week, thanks to a great conversation followed by a wonderful after dinner chat a week later, I got turned on to two authors. One is the great Isaac Asimov, one of the fathers of science fiction writing and a brilliant writer. Certainly others have suggested I read his work over the years, but since this professor helped me remember that one of my favorite writers, Orson Scott Card, admires him and told me how wonderful the Foundation series was, I decided to finally pick him up. I immensely enjoyed my first Asimov book, Prelude to Foundation. The second author he recommended by sending me a copy of his book A General Theory of Competition is Shelby D. Hunt. His intent in sharing Dr. Hunt's book was more to familiarize me with the mindset of my brilliant future professor, should I go to that school. I have just started on his book, and I noticed a connection I doubt this professor expected me to make, if indeed he made it himself.

Both books, it would seem, take notice of the problem that arises when theory is put into practice. Asimov's whole book centers around a mathematician who, once he presented a paper on a theory he developed, becomes the center of attention for many powerful groups. He continually tries to explain how impractical his theory is to actually use - it is simply something he believes would be possible, if a great deal of information were ever able to be summarized. Since no one person or even a large group of people could expect to bring that data together, though, it is therefore "possible but impractical". He repeats that phrase a great deal. There is a lot more to the book to make it a wonderfully enjoyable read, but his quest throughout centers on making the impractical usable.

Dr. Hunt's book, just as the title suggests, puts forth a general theory of competition. He hopes to include various groups of research under one larger area he calls "Resource Advantage Theory". He notes in the introduction that one of the flaws of the theory of perfect competition within the school of neoclassical economics is how imperfectly it predicts real world events. Theory should, according to one of his sources, "explain and predict phenomena well" but the theory of perfect competition is notoriously bad at predicting problems because perfect competition rarely exists in the real world.

And that's where I thought, "That's the rub, isn't it?" Theory sounds great in the ivory towers of academia. Studying phenomena - events, people, transactions, etc. - and extracting meaning from it - that is the work of scholars. Great theory, though, one would hope, can actually be put into use but what scholars even call "practitioners." I know I have spent many conversations with various parties - my father especially - discussing the problem of expecting a theory learned in a class to apply to an actual situation. Will a decrease in supply automatically mean an increase in price? Will an increase in demand mean the same thing? Neither of those things are a given, simply because there are more variables in the equation of life than just supply and demand, especially supply of and demand for one particular good or service. Economists failed to predict the burst of the Internet Stock Bubble quickly or well, and the danger housing market crash leading to a huge recession in the general marketplace went largely unnoticed until it happened. The reason is because humanity, in all its facets, is an unpredictable force. Asimov's mathematician hoped to find a way to predict the future of a people based of some known starting point. He felt it was impossible, even twenty-plus thousand years into the future with all the made up innovations in his world.

So how can we, or perhaps I should say I, hope to find some theory to predict the outcome of certain events? I'll have to do some research, I suppose. Some research, and maybe a little experimentation in the form of suggesting my ideas to actual businesses and business people in the hopes of seeing those theories in action. For now, I just hope I can learn the science of research, which is exactly what Dr. Hunt might teach me. I am glad I took the advice of a great professor and read both these amazing writers.

2 comments:

Prelude was actually written after the Foundation Trilogy was written. So the style is much more mature than the original books, which were actually a series of short stories first. But they are really great and an interesting study on the decline of society, especially when you consider when they were written.

Yes, the professor who suggested them mentioned the "Foundation Trilogy" and I got there and found seven books in the series. I read the foreword by Asimov in Prelude to get an idea of which came first (and would be called the trilogy), but I decided to read Prelude first anyway. I'll start Foundation after I've finished Dr. Hunt's book. I can see how they would be a great analysis, though.